Board of Trade: It’s Time to Pay for Transit

Business group calls for a regional sales tax and a parking levy, among other things, to raise money for transit.

By Hamutal Dotan

Photo by seango, from the Torontoist Flickr Pool.

The Toronto Region Board of Trade handed municipal and provincial politicians a giant, bow-wrapped present today, in the form of a report which lays out the business case for investing in long-term transit infrastructure. It is specific—it recommends particular taxes and levies—and it is unequivocal. It includes comparisons to other leading North American cities, and assesses benefits ranging from labour mobility to productivity rates to quality of life. It is a comprehensive argument for the fiscally concerned, and it should provide all the cover any weak-kneed politician might need to come out in favour of actually raising money to build the transit we desperately need.

The four tools the Board of Trade is recommending:

• Regional sales tax
  This would take the form of a regional add-on to the HST; at one per cent, it would raise $1-1.6 billion a year.
• Parking space levy
  This would apply to non-residential parking spaces: commercial parking (like the spaces available at Home Depot) and Green P lots. At a rate of $1/day per space, and not including metered on-street parking, it is estimated this will raise $1.2-1.6 billion a year. In contrast to the sales tax, this is also a behaviour-modifying tool—one which increases the cost of driving and therefore is predicted to reduce the number of trips made by car.
• Regional fuel tax
  The Board of Trade is recommending a flat rate per litre of fuel—at an additional 10 cents, this would raise $640-840 million.
• High occupancy toll lanes
  This would involve converting existing high occupancy vehicle (HOV) lanes into tolled lanes, so that vehicles with single occupants could pay a toll and also use those lanes. (High occupancy vehicles would continue to use them for free.) This is a much smaller revenue generator: it’s estimated it would raise $25-45 million, at a toll rate of 30 cents per kilometre.

In deciding on these tools in particular, the Board of Trade prioritized the following criteria: revenue-generating capacity; equity and fairness across different segments of the population; public acceptance; economic impact; fiscal sustainability (how prone each tool is to economic ups and downs); impact on travel behaviour (such as encouraging increased transit use); the cost of implementation; and successful implementation in other jurisdictions.

The revenue estimates add up to considerably more than the $2 billion a year that Metrolinx (the provincial agency managing regional transit growth in the Greater Toronto and Hamilton Area) has estimated it needs for its next major wave of infrastructure projects. Among those projects: a new subway loop for Toronto, aka the Downtown Relief Line. Not included in Metrolinx budgeting is the cost of operating and maintaining those new transit lines, which is why many observers believe that this $2 billion a year is just the beginning of a conversation, but won’t actually get us all the way to a better transit system. (The Board of Trade didn’t go so far as to suggest, today, that we should talk about raising more than that $2 billion a year right now; their tools add up to more because they were providing some room for negotiation on specific tools, based on how they are received by the public and politicians.)

Photo by ronnie.yip from the Torontoist Flickr Pool.

“Our message today is clear: we can no longer defer the tough decisions on how to address our region’s lack of mobility,” said Carol Wilding, president of the Board of Trade. “We’ve fallen so far behind that we need massive transit infrastructure expansion to catch up.” Her sentiments were echoed by a wide range of supporters who are publicly backing the call for dedicated revenue tools, including major developers; the presidents of George Brown, York, and Ryerson; several local environmental organizations (the Toronto Environmental Alliance, the Pembina Institute, the Toronto Atmospheric Fund); transit advocates; and the heads of many major corporations and business groups.

Making her remarks a bit more pointed, Wilding continued: “The debate is no longer if we need new revenue tools, but which ones. To succeed, all of us will have to contribute—all levels of government, the public, and the private sector. Talking about our congestion has become a regional obsession. So too has been avoiding real solutions.” And to those who, like Toronto mayor Rob Ford, are staunchly opposed to new taxes or levies, Wilding said “For those who disagree with our proposed recommendations, as a responsible stakeholder, we ask that you respond with an alternative. Saying ‘no’ is simply no longer an option. If you don’t participate, don’t complain.”

The path from today’s report to a political initiative which actually sees revenues tools (whether these or others) implemented, is almost certain to be rough. Many conservative politicians, including both Ford and provincial Progressive Conservative leader Tim Hudak, maintain that their governments’ first job must be to root out waste, that the public isn’t ready to contemplate new taxes, that the federal government should do more, and that private sector involvement can cover much of the cost of building. This Wilding rejected outright, telling reporters after her speech that “things like the federal government’s involvement, value capture [financing], the use of [public-private partnerships]—those are all tables stakes, they are all necessary and they need to be a part of the solution going forward, but in and of themselves they’re not going to raise the $40 billion that we need.”

Ontario’s newly installed premier, Kathleen Wynne, has made it clear that her government does back new revenue tools and will make them a priority; there are many city councillors in Toronto who feel the same way. Nonetheless, the sheer number of governments that need to be involved in any regional plan (including both the minority provincial government and all of the GTA municipalities), and the reluctance most politicians have thus far shown to risk voter wrath by making the case for increased taxes and levies, will make it a real challenge to move forward.

Today’s Board of Trade report is meant to help inform, among others, Toronto City Council, which will consider the question of revenue tools for transit later this spring. After that, Metrolinx will unveil an investment strategy for transit on May 27, 2013.

The Board of Trade’s full discussion paper explaining how it arrived at the recommended revenue tools is online [PDF]. The Board has also launched an online campaign in support of dedicated revenue tools for transit.